Cash-strapped Consumers vote with their feet on higher restaurant vs. grocery prices
Rising restaurant prices vs. falling grocery prices certainly help explain the continued drop in restaurant traffic as Cash-strapped Consumers flock to grocery stores and eat more at home. Facing higher minimum wages, overtime rules and potentially the end of the tip wage come the 2016 presidential election, it looks like the restaurant labor cost pain is far from over with margins likely to be pressured further.
Restaurants continued to increase prices in September even as grocers kept prices steady, according to new federal data, continuing a trend in which the inflationary gap between the two major purveyors of food to consumers has widened into a gulf. Prices for food away from home rose 0.2 percent from August to September, according to the latest consumer price index data from the U.S. Bureau of Labor Statistics. Over the past year, restaurant prices have risen 2.4 percent. By contrast, prices for food eaten at home were flat in September from August, but down 2.2 percent over the past year. That’s a 4.6-percentage-point gap in pricing between restaurants and grocers. Grocery prices have declined on a year-over-year basis for 10 straight months — surpassing the last sustained period of grocery price deflation in 2009, when the country was mired in its worst economic downturn in 80 years. Grocers have lowered prices to reflect lower commodity costs. Restaurants, meanwhile, have maintained cost increases to match rising labor costs and higher lease rates.
